Investing with Real Estate Options

After looking into many different real estate investing strategies, I have decided that based on my personality (lazy hands off investor), I wanted to concentrate my efforts on purchasing single family starter homes and lease optioning them to tenant buyers. I felt that this method would give me the best of both worlds as far as fairly quick upfront cash and cash flow.

While listening to my favorite real estate podcast, I found out about Andy Heller’s lease option program that seemed to be exactly what I was looking for. Before dropping the cash to buy his program I went to the library and grabbed a copy of his book Buy Low, Rent Smart, Sell High. I have to say that I loved this book. It really explains a lot of things in detail and this REI method seemed to be exactly what I was looking for. So I sucked it up and purchased the course.

I was really hoping for more with the course. It was basically Andy Heller and his partner reiterating in audio format the exact same information in his book. Not much different except for the hefty price tag. To be fair, it did come with copies of contracts and letters that they use but these can often be found for free by digging around on some investment club websites.

The main problem with this method is that it is really based on buying REO properties. Now I don’t know what it is like in your neck of the woods but around here, 95% of the REO properties are in the ghetto which is not the kind of area I want to invest in for this purpose. The other 5% that are the right types of houses in the right locations usually need a LOT of work and the banks just aren’t giving a big enough discount to make the deal profitable. The small fraction of these that could be good houses end up being bid up by other investors who either have different numbers than I do, are going to renovate and live in the property, or are just plain dumb. I like to think the later.

Sorry for the REO rant. I’m just a frustrated newbie. Anyway…more on my lease option strategy coming soon. I am currently reading several books on this method and will have reviews for you shortly.

Have you ever tried lease optioning a property? Let me know how it went.